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IBM vs. MSFT: IBM vs. Microsoft Stock Comparison

How do IBM (IBM) and Microsoft (MSFT) stack up? This page sets them side by side across company profile, performance and risk, profitability, growth, financial strength, dividends, and valuation, with selected fundamentals also measured against each stock's industry-group peers.

Company Profile

IBM (IBM) and Microsoft (MSFT) both fall under the Software & Services industry group, but IBM is classified in IT Services while MSFT is classified in Software.

Company profile comparison for IBM (IBM) and Microsoft (MSFT)
Profile ItemIBMMSFT
NameInternational Business Machines CorporationMicrosoft Corporation
Country/RegionUnited StatesUnited States
GICS SectorInformation TechnologyInformation Technology
GICS Industry GroupSoftware & ServicesSoftware & Services
GICS IndustryIT ServicesSoftware
GICS Sub-IndustryIT Consulting & Other ServicesSystems Software
Market Capitalization220.76 billion USD3,678.62 billion USD
CurrencyUSDUSD
ExchangeNYSENasdaq
Listing DateJanuary 2, 1962March 13, 1986
Security TypeCommon StockCommon Stock

Price Performance

Cumulative Growth

IBM
MSFT
GSPC
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IBM (IBM) vs. Microsoft (MSFT), with S&P 500 (GSPC) for reference: Growth of a $10,000 investment over the past five years. Adjusted for dividends and splits.

Trailing Returns

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Trailing total returns for IBM (IBM) and Microsoft (MSFT). Returns over one year are annualized.

Calendar-Year Returns

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Calendar-year total returns for IBM (IBM) and Microsoft (MSFT). Each bar is that year's total return, measured year-end to year-end.

Performance Metrics

Price performance metrics for IBM (IBM) and Microsoft (MSFT)
MetricIBMMSFT
Total Return (1Y)1.39%-4.43%
Total Return (3Y, Annualized)21.89%16.10%
Total Return (5Y, Annualized)15.69%12.00%

Risk Profile

Drawdown History

IBM
MSFT
GSPC
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IBM (IBM) vs. Microsoft (MSFT), with S&P 500 (GSPC) for reference: Drawdown from the running peak over the past five years. Each line shows the decline from its prior peak; 0% marks a new high.

Return Distribution

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Distribution of monthly total returns for IBM (IBM) and Microsoft (MSFT). Each bar is the share of months whose return fell in that 5% bucket.

Risk Metrics

Risk profile metrics for IBM (IBM) and Microsoft (MSFT)
MetricIBMMSFT
Volatility (1Y, Annualized)48.21%32.14%
Beta (5Y)0.711.11
Max Drawdown (5Y)-37.50%-37.15%
Avg. Volume (3M)11.11M40.35M

Risk-Adjusted Performance

Risk-Return Positioning

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IBM and MSFT are plotted by 1-year volatility (risk) and 1-year return. The dashed Capital Allocation Line runs from the risk-free rate through the shared industry median.

Risk-Adjusted Metrics

Risk-adjusted metrics for IBM (IBM) and Microsoft (MSFT)
MetricIBMMSFT
Sharpe Ratio (1Y)-0.05-0.26
Sortino Ratio (1Y)-0.07-0.40

Profitability

ROE (TTM)

Both IBM (IBM) at 34.46% and Microsoft (MSFT) at 34.04% sit in the top peer quartile for ROE, suggesting each generates more profit from shareholders’ equity than typical industry peers.

IBM

Software & Services industry group

34.46%

Max
62.27%
IBM
34.46%
Q3
16.91%
Median
5.27%
Q1
-13.73%
Min
-54.87%

MSFT

Software & Services industry group

34.04%

Max
62.27%
MSFT
34.04%
Q3
16.91%
Median
5.27%
Q1
-13.73%
Min
-54.87%
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IBM (IBM) vs. Microsoft (MSFT): A comparison of their ROE against the Software & Services industry group benchmark.

Net Margin (TTM)

For every dollar of sales, both IBM (IBM) at 15.52% and Microsoft (MSFT) at 40.31% retain more as net profit than most peers, landing in the top net margin quartile of their industries.

IBM

Software & Services industry group

15.52%

Max
41.99%
IBM
15.52%
Q3
15.18%
Median
3.79%
Q1
-5.84%
Min
-30.39%

MSFT

Software & Services industry group

40.31%

Max
41.99%
MSFT
40.31%
Q3
15.18%
Median
3.79%
Q1
-5.84%
Min
-30.39%
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IBM (IBM) vs. Microsoft (MSFT): A comparison of their net margin against the Software & Services industry group benchmark.

Operating Margin (TTM)

Both IBM (IBM) at 16.55% and Microsoft (MSFT) at 45.11% convert sales into operating profit at a top-quartile rate, pointing to tighter cost discipline before financing and tax.

IBM

Software & Services industry group

16.55%

Max
47.12%
IBM
16.55%
Q3
15.23%
Median
4.59%
Q1
-6.33%
Min
-32.77%

MSFT

Software & Services industry group

45.11%

Max
47.12%
MSFT
45.11%
Q3
15.23%
Median
4.59%
Q1
-6.33%
Min
-32.77%
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IBM (IBM) vs. Microsoft (MSFT): A comparison of their operating margin against the Software & Services industry group benchmark.

Profitability Metrics

Profitability metrics for IBM (IBM) and Microsoft (MSFT)
MetricIBMMSFT
ROE (TTM)34.46%34.04%
ROA (TTM)5.30%14.09%
Net Margin (TTM)15.52%40.31%
Operating Margin (TTM)16.55%45.11%
Gross Margin (TTM)58.10%67.94%

Growth

Revenue Growth

Both IBM (IBM) at 7.62% and Microsoft (MSFT) at 17.79% land near their industries' usual revenue growth ranges, so top-line momentum looks broadly in line with peers on both sides.

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IBM (IBM) vs. Microsoft (MSFT): A comparison of their Revenue Growth across different time periods.

EPS Growth

IBM (IBM) at 73.72% sits in the top EPS growth quartile, while Microsoft (MSFT) at 31.60% is closer to the peer norm — faster per-share earnings growth for IBM.

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IBM (IBM) vs. Microsoft (MSFT): A comparison of their EPS Growth across different time periods.

Growth Metrics

Growth metrics for IBM (IBM) and Microsoft (MSFT)
MetricIBMMSFT
Revenue Growth (YoY)7.62%17.79%
Revenue Growth (3Y CAGR)3.72%16.12%
EPS Growth (YoY)73.72%31.60%
EPS Growth (3Y CAGR)83.76%22.86%

Financial Strength

Current Ratio (MRQ)

Microsoft (MSFT) at 1.23 keeps current ratio within its industry’s typical mid-range, while IBM (IBM) at 0.79 runs in the tighter-liquidity quartile — a thinner cushion against current liabilities for IBM.

IBM

Software & Services industry group

0.79

Max
5.39
Q3
2.79
Median
1.63
Q1
1.03
IBM
0.79
Min
0.03

MSFT

Software & Services industry group

1.23

Max
5.39
Q3
2.79
Median
1.63
MSFT
1.23
Q1
1.03
Min
0.03
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IBM (IBM) vs. Microsoft (MSFT): A comparison of their current ratio against the Software & Services industry group benchmark.

Debt / Equity (MRQ)

Microsoft (MSFT) at 0.29 carries an industry-typical debt-to-equity mix, while IBM (IBM) at 1.89 uses more debt funding than most peers.

IBM

Software & Services industry group

1.89

Max
2.42
IBM
1.89
Q3
1.07
Median
0.33
Q1
0.06
Min
0.00

MSFT

Software & Services industry group

0.29

Max
2.42
Q3
1.07
Median
0.33
MSFT
0.29
Q1
0.06
Min
0.00
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IBM (IBM) vs. Microsoft (MSFT): A comparison of their debt-to-equity ratio against the Software & Services industry group benchmark.

Financial Strength Metrics

Financial strength metrics for IBM (IBM) and Microsoft (MSFT)
MetricIBMMSFT
Current Ratio (MRQ)0.791.23
Debt / Equity (MRQ)1.890.29
Net Debt / EBITDA3.470.27

Dividends

Dividend Yield (TTM)

Both IBM (IBM) at 2.84% and Microsoft (MSFT) at 0.73% yield above their industries’ entire benchmark ranges — high enough that dividend safety, not income, becomes the first question.

IBM

Software & Services industry group

2.84%

IBM
2.84%
Max
0.00%
Q3
0.00%
Median
0.00%
Q1
0.00%
Min
0.00%

MSFT

Software & Services industry group

0.73%

MSFT
0.73%
Max
0.00%
Q3
0.00%
Median
0.00%
Q1
0.00%
Min
0.00%
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IBM (IBM) vs. Microsoft (MSFT): A comparison of their dividend yield against the Software & Services industry group benchmark.

Dividend Payout Ratio (TTM)

Both IBM (IBM) at 59.77% and Microsoft (MSFT) at 19.83% pay out more of their earnings than any of their industry peers — the thinnest cover in their groups, so dividend headroom deserves attention.

IBM

Software & Services industry group

59.77%

IBM
59.77%
Max
0.00%
Q3
0.00%
Median
0.00%
Q1
0.00%
Min
0.00%

MSFT

Software & Services industry group

19.83%

MSFT
19.83%
Max
0.00%
Q3
0.00%
Median
0.00%
Q1
0.00%
Min
0.00%
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IBM (IBM) vs. Microsoft (MSFT): A comparison of their payout ratio against the Software & Services industry group benchmark.

Dividend Metrics

Dividend metrics for IBM (IBM) and Microsoft (MSFT)
MetricIBMMSFT
Dividend Yield (TTM)2.84%0.73%
Dividend Payout Ratio (TTM)59.77%19.83%

Valuation

P/E Ratio (TTM)

Both IBM (IBM) at 21.05 and Microsoft (MSFT) at 27.71 land around their industries’ usual P/E ratio levels — neither is getting a clear earnings-multiple discount or premium versus peers.

IBM

Software & Services industry group

21.05

Max
107.17
Q3
61.33
Median
34.31
IBM
21.05
Q1
16.59
Min
0.39

MSFT

Software & Services industry group

27.71

Max
107.17
Q3
61.33
Median
34.31
MSFT
27.71
Q1
16.59
Min
0.39
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IBM (IBM) vs. Microsoft (MSFT): A comparison of their P/E ratio against the Software & Services industry group benchmark.

P/S Ratio (TTM)

IBM (IBM) at 3.20 is priced about in line with its industry on P/S ratio, while Microsoft (MSFT) at 11.09 sits in the pricier quartile — MSFT costs more per dollar of sales.

IBM

Software & Services industry group

3.20

Max
21.27
Q3
10.17
Median
4.61
IBM
3.20
Q1
2.41
Min
0.02

MSFT

Software & Services industry group

11.09

Max
21.27
MSFT
11.09
Q3
10.17
Median
4.61
Q1
2.41
Min
0.02
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IBM (IBM) vs. Microsoft (MSFT): A comparison of their P/S ratio against the Software & Services industry group benchmark.

P/B Ratio (MRQ)

On P/B ratio, both IBM (IBM) at 6.41 and Microsoft (MSFT) at 8.32 are valued close to their industries’ norm against book — neither stands out from peers.

IBM

Software & Services industry group

6.41

Max
21.34
Q3
9.85
IBM
6.41
Median
4.58
Q1
2.15
Min
-8.85

MSFT

Software & Services industry group

8.32

Max
21.34
Q3
9.85
MSFT
8.32
Median
4.58
Q1
2.15
Min
-8.85
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IBM (IBM) vs. Microsoft (MSFT): A comparison of their P/B ratio against the Software & Services industry group benchmark.

Valuation Metrics

Valuation metrics for IBM (IBM) and Microsoft (MSFT)
MetricIBMMSFT
P/E Ratio (TTM)21.0527.71
P/S Ratio (TTM)3.2011.09
P/B Ratio (MRQ)6.418.32
Free Cash Flow Yield (TTM)5.46%0.45%